Geographic Information Arbitrage

Challenges and opportunities for local content producers

For over a decade in the startup scene, I've been intrigued by a phenomenon I call "Geographic Information Arbitrage." This occurs when one geographic area has more information than another, primarily due to language barriers today. Generally, cutting-edge knowledge lands in English first, creating an information gap.

This gap is an arbitrage opportunity. Especially in Brazil, I've seen startups thrive by either exploring local market inefficiencies or importing ideas from the US, adjusting to local flavors. Many successful startups are essentially localized versions of American ones. Remember Rocket Internet in the 2010s? It brought Silicon Valley ideas to Europe and LATAM.

Another interesting but less discussed side effect of the information arbitrage is the "local influencers". You can carve a niche for yourself in areas like development, marketing, or finance by repackaging US-centric knowledge for the Brazilian market. This holds true for many other local markets, too. Those "local influencers" rarely create truly new information, but due to a gap between the local market and the global ones, they can grow their audiences.

However, the time lag between the US and other markets is shrinking thanks to the internet. What took years for an American startup idea to be mirrored locally now happens much faster.

Yet, the real game-changer is AI. Its enhanced translation capabilities are smoothing out the information bumps, narrowing the arbitrage space, especially in content. Business ideas may still have a time cushion as they require time to execute.

This tech evolution is a double-edged sword. On one side, it's opening global doors for local content creators. Who would have thought that shows from Korea, France, or Spain, like Squid Game, Lupin, and Money Heist, would gather global applause on Netflix? Yet, on the flip side, local "experts" merely repackaging US content will find the ground shifting. The competition gets tougher, but the global stage is now more accessible for genuine value creators.